How mStable Works

The building blocks behind mStable tokens and how they work together.

Core Stack

mStable combines several proven DeFi layers into a single, automated token experience:

  • Base layer – Ethena (sUSDe): A yield-bearing stablecoin, forming the foundation of each product.

  • Yield layer – Pendle PTs: Principal Tokens (PTs) from Pendle lock in a fixed return until expiry.

  • Amplification – Aave looping: Collateral is looped (deposit → borrow → redeposit) to increase exposure.

  • Automation – Bots + dHEDGE contracts:

    • Bots secure Aave borrow capacity.

    • Rollovers happen automatically as PTs near expiry.

    • Health factor and risk limits are managed in real-time.

Token Output

The result is an ERC20 token (like mPT-sUSDe) that:

  • Represents a position in this yield strategy.

  • Appreciates in value as yield is realized.

  • Requires no manual management.

Key Features

  • Fixed yield component: PTs lock in rates until expiry.

  • Amplified exposure: Aave looping boosts performance.

  • Automated rollovers: Expired PTs are reinvested seamlessly.

  • ERC20 simplicity: Tradable, composable, and portable across DeFi.

Visual Flow (for diagram)

sUSDe → Pendle PT → Aave looping → Bots manage rollovers → mStable Token appreciation

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